The FARC’s finances: Unfunny money
WHEN Colombia’s government and the FARC rebel group missed their self-imposed deadline of March 23rd to sign a peace agreement, the main sticking points were how to demobilise the FARC’s 6,500 fighters and how the deal would be ratified. Both sides expressed confidence that an agreement ending their half-century fight will be signed by the end of 2016.
One contentious issue no longer on the agenda is money. At its strongest, in the late 1990s and early 2000s, the FARC had 18,000 fighters and a war chest brimming with cash from illegal gold-mining, extortion, kidnapping and the drug trade. Estimates of the FARC’s annual income at the time range from $200m to $3.5 billion. Since then the FARC’s fortunes have faded, both on the battlefield and at the bank. Its finances “aren’t what they were 15 years ago”, says a government official.
But the group may have held on to much of its loot. According to an unpublished study by government analysts, even after paying to maintain its fighters the FARC still had assets worth 33 trillion pesos ($10.5 billion) in 2012. In the peace negotiations taking place in Havana the government tried to extract some of this to compensate victims of the FARC’s crimes. After more than a year of wrangling, the FARC agreed to “contribute to the material reparation of the victims” but said it was broke.
The government is welcome to take over its offshore bank accounts, said the FARC’s top negotiator, Iván Márquez, in an interview with the BBC. “But we don’t have any.” No one known to be connected with the FARC (or the ELN, a smaller guerrilla force with which the government will hold talks) is among the 850 Colombians whose names appear in the “Panama papers”, leaked documents that reveal the hidden wealth of thousands of clients of a Panama-based law firm (see article). Mr Márquez is no doubt delighted that the government’s top peace negotiators—Humberto de la Calle, who leads talks with the FARC, and Frank Pearl, who handles the ELN—do appear in the document haul. Both say the offshore companies they established were legitimate, had been reported to the Colombian tax authorities and are no longer active.
Financial analysts think that much of the FARC’s hoard, its criminal origins disguised, is invested inside Colombia, in transport companies, rural property and even the stockmarket. Some has probably been stashed abroad, in Costa Rica, Venezuela and Ecuador, as well as in Panama. Anti-money-laundering officers at Colombian companies fear that a share of this money will come back into the country after the peace accord is finally signed. According to a survey conducted in 2015 by Lozano Consultores, a consulting firm, 61% of banks’ compliance officers felt ill-prepared to identify and report such cash to the government.
A peace agreement will not deter the authorities from trying to track down the FARC’s assets. Under Colombian law, they can seize the fortunes of people who mysteriously become rich until they can account for their wealth. But investigators are unlikely to find much. Worldwide, governments detect just 20 cents of every $100 of laundered money, estimates the UN Office on Drugs and Crime. That is a pity. The cost of implementing any peace accord, which includes paying for demining and infrastructure, is likely to be $15 billion-30 billion over ten years. The FARC’s hidden fortune might pay for a big chunk of that.
The Economist |